Dear Neighbor,
If you’re over 55 and considering a move from your current home to another home in California… then you need to be aware of the unique tax relief benefits state law provides when you move. This short pamphlet provides a general overview of what you need to know to:

• Downsize (or “rightsize”) into the best home for your lifestyle…
• Escape the maintenance trap—or the two-story home with stairs…
• Move closer to the beach—without paying “beach home” taxes…
• Reduce the position of real estate in your overall wealth portfolio…
• Or… move closer to friends, family or places special to you.

Once you’ve read this carefully, please give me a call to discuss how it applies to your specific situation. I look forward to helping you into the home of your dreams.

The Background

In the 1970s, Southern California real estate prices began to increase at such a rapid pace that many residents—especially those on a fixed income—were not be able to keep up with their increasing property taxes, which are based on the assessed market value of their homes. In 1978, California voters acted to place a limit on the rate at which counties could increase property taxes on homeowners.

A Cap on Tax Increases (Prop. 13)

Officially called the “People’s Initiative to Limit Property Taxation,” this amendment to the Constitution of California restricted the increases in property tax bases (originally 1.25% of the home value) to a number not to exceed 2% annually, roughly tracking the rate of inflation, according to the Consumer Price Index. The only time property taxes could increase beyond that 2%, was if the property changed hands or if a new addition or renovation affected the home value. An unintended consequence of this relief was that many homeowners benefitting from it felt they were “locked into” their homes, or at least strongly incentivized away from the natural cycle of real estate: “down-sizing” to a more suitable home once the kids are out of the house… and certainly before a large, two

story house with lots of stairs becomes a maintenance and safety concern.
For many empty-nesters and retirees, a move to another home would mean a much higher tax bill… so instead, they lived in homes much larger than they needed, and kept new and growing families from being able to move into them.
To correct for these negative side-effects, two additional measures have been enacted to supplement Proposition 13
Allowing Tax Bases to Move With Homeowners (Props. 60 & 90)

Proposition 60, passed in 1986, allows homeowners over the age of 55 to transfer the assessed value of their primary place of residence to a replacement primary place of residence within the same county.

The replacement home must be of equal or lesser value than the original home, and it must be purchased or built within two years of the sale date of the original home. In most cases, “equal or lesser value” means 100% of the market value of the original property if the replacement home is purchased before the original home is sold; or 105% of the market value of an original home, if the replacement home is purchased within one year after the sale of the original home; or 110% of the market value of the original home if the replacement home is purchased within the second year after the sale of the original home.

Proposition 90 extends the same tax base transfer option created by Proposition 60, across county lines (for those counties that have passed ordinances to participate).

Note: Proposition 60 tax relief benefits are available to any California resident by state

law, but Proposition 90 requires your new county’s participation. Not all counties participate in Proposition 90. So far, only 10 out of 58 counties do participate, but they include most of Southern California.

The participating counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara and Ventura.

Additional Qualifying Criteria

1. You must be moving your principal place of residence, not buying a second home.
2. Both spouses need not be 55 or over; one resident over 55 is sufficient.
3. A person may only use Proposition 60/90 to transfer a tax base once. (The only exception is if you become severely

or permanently disabled and your permanently disabled and your disability requires you to move to another home.)

4. Proposition 60/90 can not be used in the case of a non-monetary transfer of property from parent to child (as under Proposition 58). The homes must be sold and purchased for money.
5. The “fair market value” of both homes is crucial in qualifying for Proposition 60/90 benefits. Usually the sale or purchase price on an open market (including real estate fees) is accepted by the assessor as the fair market value, but there are cases in which a price is determined by the appraiser in the assessor’s office to be above or below market value. (If this might make a difference to you, I would be happy to help you navigate working with the assessor’s office.)

6. Your application must be filed with the assessor’s office within 3 years of the purchase date of the replacement home.

Special Cases To Discuss With Me

1. I sold my house a year ago and moved out of state. Now I want to move back. Can I still qualify for Prop 60/90?
2. I am purchasing a new home, and I plan to rent it out before remodeling and moving in. I plan to sell my original home just before I move in. Will I qualify?
3. Will I qualify if I rent out my home for one year, and sell it to buy a new home?
4. My spouse and I divorcing and plan to sell our home. Which of us can transfer the tax base to his or her next home?
5. I bought a vacant lot 10 years ago. I want to sell my home now and build on that lot. Would I qualify for Prop 60/90?

Dear Neighbor,
If you’re over 55 and considering a move from your current home to another home in California… then you need to be aware of the unique tax relief benefits state law provides when you move. This short pamphlet provides a general overview of what you need to know to:

• Downsize (or “rightsize”) into the best home for your lifestyle…
• Escape the maintenance trap—or the two-story home with stairs…
• Move closer to the beach—without paying “beach home” taxes…
• Reduce the position of real estate in your overall wealth portfolio…
• Or… move closer to friends, family or places special to you.

Once you’ve read this carefully, please give me a call to discuss how it applies to your specific situation. I look forward to helping you into the home of your dreams.

The Background

In the 1970s, Southern California real estate prices began to increase at such a rapid pace that many residents—especially those on a fixed income—were not be able to keep up with their increasing property taxes, which are based on the assessed market value of their homes. In 1978, California voters acted to place a limit on the rate at which counties could increase property taxes on homeowners.

A Cap on Tax Increases (Prop. 13)

Officially called the “People’s Initiative to Limit Property Taxation,” this amendment to the Constitution of California restricted the increases in property tax bases (originally 1.25% of the home value) to a number not to exceed 2% annually, roughly tracking the rate of inflation, according to the Consumer Price Index. The only time property taxes could increase beyond that 2%, was if the property changed hands or if a new addition or renovation affected the home value. An unintended consequence of this relief was that many homeowners benefitting from it felt they were “locked into” their homes, or at least strongly incentivized away from the natural cycle of real estate: “down-sizing” to a more suitable home once the kids are out of the house… and certainly before a large, two

story house with lots of stairs becomes a maintenance and safety concern.
For many empty-nesters and retirees, a move to another home would mean a much higher tax bill… so instead, they lived in homes much larger than they needed, and kept new and growing families from being able to move into them.
To correct for these negative side-effects, two additional measures have been enacted to supplement Proposition 13
Allowing Tax Bases to Move With Homeowners (Props. 60 & 90)

Proposition 60, passed in 1986, allows homeowners over the age of 55 to transfer the assessed value of their primary place of residence to a replacement primary place of residence within the same county.

The replacement home must be of equal or lesser value than the original home, and it must be purchased or built within two years of the sale date of the original home. In most cases, “equal or lesser value” means 100% of the market value of the original property if the replacement home is purchased before the original home is sold; or 105% of the market value of an original home, if the replacement home is purchased within one year after the sale of the original home; or 110% of the market value of the original home if the replacement home is purchased within the second year after the sale of the original home.

Proposition 90 extends the same tax base transfer option created by Proposition 60, across county lines (for those counties that have passed ordinances to participate).

Note: Proposition 60 tax relief benefits are available to any California resident by state

law, but Proposition 90 requires your new county’s participation. Not all counties participate in Proposition 90. So far, only 10 out of 58 counties do participate, but they include most of Southern California.

The participating counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara and Ventura.

Additional Qualifying Criteria

1. You must be moving your principal place of residence, not buying a second home.
2. Both spouses need not be 55 or over; one resident over 55 is sufficient.
3. A person may only use Proposition 60/90 to transfer a tax base once. (The only exception is if you become severely

or permanently disabled and your permanently disabled and your disability requires you to move to another home.)

4. Proposition 60/90 can not be used in the case of a non-monetary transfer of property from parent to child (as under Proposition 58). The homes must be sold and purchased for money.
5. The “fair market value” of both homes is crucial in qualifying for Proposition 60/90 benefits. Usually the sale or purchase price on an open market (including real estate fees) is accepted by the assessor as the fair market value, but there are cases in which a price is determined by the appraiser in the assessor’s office to be above or below market value. (If this might make a difference to you, I would be happy to help you navigate working with the assessor’s office.)

6. Your application must be filed with the assessor’s office within 3 years of the purchase date of the replacement home.

Special Cases To Discuss With Me

1. I sold my house a year ago and moved out of state. Now I want to move back. Can I still qualify for Prop 60/90?
2. I am purchasing a new home, and I plan to rent it out before remodeling and moving in. I plan to sell my original home just before I move in. Will I qualify?
3. Will I qualify if I rent out my home for one year, and sell it to buy a new home?
4. My spouse and I divorcing and plan to sell our home. Which of us can transfer the tax base to his or her next home?
5. I bought a vacant lot 10 years ago. I want to sell my home now and build on that lot. Would I qualify for Prop 60/90?